YouTube channels its own course

Programmer Kyncl sticks to analytics to avoid pitfalls of rivals

YouTube programming czar Robert Kyncl aims to succeed by avoiding some of the pitfalls that competitors from Netflix to Yahoo may be headed toward.

In an interview at CES with Variety preceding his Thursday keynote, YouTube’s VP of global content partnerships discussed the channel-centric strategy that steered the Google-owned hub into new territory. Last November, YouTube began launching the first of what will be as many 100 branded channels from everyone from Ashton Kutcher, Stan Lee and Deepak Chopra to GeekChicDaily.

The ad-supported channels began sprouting up as some other digital power players drew attention to their own programming strategies by taking a decidedly different tack: licensing individual shows, as Yahoo recently did with “Electric City,” a new series from producers that include Tom Hanks, who came to CES to promote it.

Kyncl believes cherrypicking programs has no place at algorithm-driven companies more informed by Silicon Valley than Hollywood. “Gut-based decisions don’t have long-lasting life inside organizations like these,” he said. “They get rejected like foreign bodies, essentially, over time.”

Which isn’t to say Kyncl feels YouTube can rely on algorithms alone. While the company closely studies patterns of consumption across its massive platform, he’s seen others led astray. “Analytics do fail companies as well,” he said. “Look at Netflix.”

Kyncl knows Netflix well, having come over from the Los Gatos, Calif.-based company 18 months ago to spearhead YouTube’s content acquisition efforts. Netflix’s disastrous decisions late last year to alter its pricing and spin off its disc business have been blamed on the company misinterpreting data from its own customer base.

Netflix has also made some big bets on licensing individual programs, from a revival of the Fox comedy “Arrested Development” to an adaptation of the BBC drama “House of Cards.” Other portals that have made similar, albeit smaller bets, include AOL, Hulu and Sony-owned Crackle.

But Kyncl places more faith in commissioning entire channels, likening YouTube’s strategy to that of an MSO like Comcast that chooses the brands in its programming package based on demographic information and advertiser demand. The channel push is also a reflection of the fact that most video consumption these days is done in channel format on live TV as opposed to VOD platforms.

YouTube wants to establish a comfort level not just with consumers but with advertisers, who may feel encouraged to shift more ad dollars away from TV if the site is structured more like that medium. The Google-owned platform wants to put some distance between its bright future and a past that repelled advertisers with too much user-generated content.

“Dogs on skateboards get $2 CPMs,” said Kyncl. “Dogs on skateboards inside a skateboard channel get $20 CPMs.”

While squeezing more dollars out of Madison Avenue is the prime objective, Kyncl revealed that down the road his programming partners could also take advantage of YouTube’s ability to charge for content, a capability installed years ago when the company began licensing movies for rental. A free channel could attract incremental revenue by directing its viewers to movies that could draw additional dollars.

Where that leaves YouTube’s standalone storefront for movies from many of the top studios is something Kyncl said he is still trying to figure out as the website shifts its focus to original content. But he made clear there’s no plan to shutter that area of YouTube or stop licensing movies, as they still have value for other parts of the company, including Google TV.

YouTube’s strategy is said to be backed by at least $100 million, divvied up among YouTube’s many partners as an advance against their future ad revenue. Content companies had long been loath to utilize YouTube as a distribution platform because the company insisted on revenue splits instead of paying upfront for content.

The channels also provided the organizing principle for a radical redesign of the YouTube homepage introduced late last year. But as for the shows in the channels themselves, they are mostly the same shortform clips that programmers already on YouTube have been putting out there for years.

YouTube has launched only a handful of the planned 100 channels so far, with the rest of the bows scattered over the next six months and encompassing everything from household names Jay-Z and WWE to YouTube-bred phenomena including Smosh and Machinima.

Kyncl wouldn’t reveal how the few currently active channels are doing in the early going because he said he’s being patient. “What we’re focused on is channels slowly growing subscribers rather than hitting some rating point in week one or two,” he said.

But the very reason YouTube decided to spread its wealth across so many channel launches is that Kyncl wants to see which ones attract viewers and advertisers. While at some point down the road Kyncl could withdraw financial support for a channel that isn’t cutting it, a successful one could get more funding for longer programming.

His strategy may differ from competitors in new and old media, but the endgame is the same: creating a hit series. “We can certainly get the quality level of shows like ‘Jersey Shore,'” he said of the MTV unscripted juggernaut. “And shows like that can do wonders for a network.”